A hidden dimension to healthcare costs lies in a workplace perk that most people take for granted: Paid time off to recover from an illness or injury. And most employers can improve their approach and improve health while reducing lost time by focusing on the right people, based on research by HCMS Group.

Work time lost because of illness or disability represents a major indirect cost in addition to the direct expenses of healthcare and other employee benefits. Sick days, disability, and workers’ compensation time off run into the millions of dollars every year for large employers and into the hundreds of billions for the U.S. economy, studies have shown.

The average worker with a disability claim uses about 11 days of recovery time a year, costing employers $5,577 annually (see figure 1 below). That is based on 10 million lost-time episodes from HCMS Group’s Research Reference Database of almost 4 million people covered by more than 300 employers.

But those averages mask the true nature of the issue. People in the 5% of the population that accounts for more than 50% of healthcare costs consume much more recovery time. For them, disability and sick time adds up to almost 92 days a year and costs almost $42,000. By comparison, members of the lowest-cost 50% use fewer than 2 sick days a year at a cost of less than $1,300. Clearly, the high-cost 5% group offers a great opportunity for helping people return more quickly to health and work, saving money on recovery time.

This is where most employers could improve their management approach. Almost every disability-management program in use today focuses on a patient’s primary medical problem. There’s a whole industry built around “disease management.” Do a Google search on that term, and you get more than 41 million entries.

What’s wrong with that? Well, a person’s primary disease is often only a relatively small part of the picture, based on more than a decade of research on the high-cost 5% group by HCMS. These are people with complex health needs who typically have 11 medical diagnoses and 10 healthcare providers, and are taking 10 prescription medications, HCMS researchers have found.

The additional conditions, known as comorbidities, account for anywhere from 50% to more than 90% of total healthcare costs for people in the 5% group, according to HCMS data (see figure 2 below). For example, among people with cardio-metabolic syndrome–one of the highest-cost diseases–the primary heart condition amounts to just 9% of total medical costs. For those with a musculoskeletal condition, the cost of treating the basic injury to the body’s structure of bones, joints and muscles comes to just 24% of the total.

Consequently, disease management that focuses on a single dimension of a person’s set of conditions will fail to address most of what else is keeping that employee away from work. The main takeaway from these research findings is the need for a whole person-centered approach to helping people return to health and to work.

— Bob Simison, HCMS communications, on behalf of HCMS Data Analytics

Figure 1: Average disability cost by population group, from the lowest-cost 50% to the highest-cost 5%.

(Click image to enlarge)

Figure 2: Cost of primary condition and comorbidities, by category of primary disease.

How a Person-Centric Risk Management Model Helps a Speedy Return to Work… and Health.

HCMS Newsletter December 2014

Work time that is lost because of illness or disability represents a major indirect cost to employers in addition to the direct cost of healthcare and other health benefits. Most disability management programs focus primarily on a patient’s primary medical disease—hence the term disease management.

Variation in Recovery Time

Using our big data Research Reference Database on nearly 4 million people from over 300 employers with 10 million lost time episodes, our research shows the importance of population risk analysis and a person-centric approach in reducing lost-time cost.

Figure 1 is a population risk analysis on disability claimants that demonstrates the huge variation in lost time. Half of the claimants in this population lost 1.7 days from work while the high-risk 5% population lost an average of 91.5 days –over 50 times more than the other population. Our predictive Human Capital Risk Index (HUI) shows risk well before actual lost time which provides a preventive intervention disability management strategy.

Figure 1: Disability Claimant Population Risk Analysis

(Click image to enlarge)

The Need for a Person-Centric Approach

Further research shows why a disease-centric disability-management system is less effective because, as shown in Figure 2, the cost of the primary disease in disability cases is only a fraction of the total cost and does not account for the many comorbidities, or additional diseases, those disability claimants have. This situation drives the need for a proactive, preventive, and person-centric approach that is informed by the predictive HUI which allows for focus on the whole person, not just the primary disease.

Figure 2: Disability Claimant Comorbidity Analysis

(Click image to enlarge)

Conclusion

Implementing a predictive analytic person-centric disability management strategy that focuses on the high-risk 5% population has major potential for reducing disability-related lost time and returning workers to productive health.

HCMS Implementing Two-Factor Authentication for All Online Services

HCMS will soon be implementing an additional layer of security for access to online services such as O|BI, iHUI, and SMA. The new security feature is called two-factor authentication. You may be familiar with earlier generations of two-factor authentication that utilized dedicated tokens—a gizmo with a button that generates a code. We will utilize mobile devices and land lines as our method of two-factor authentication. Basically, you will register a mobile device and/or a land line. When you log in, you will be required to confirm your login via a code texted to your mobile device or a phone call to the land line. In addition to entering your password, two-factor refers to the fact that you have to supply something you know (a password) and something you have (the mobile device or land line) in order to log in, increasing security by reducing the chances your account can be hacked. More to come soon on this important new security feature!

KnovaSolutions in Action: Improved Family Health

A middle-aged factory worker with neck and back pain was scheduled for surgery when he enrolled in KnovaSolutions. He had been in and out of work for almost a year and was taking narcotic pain medications. His wife’s elderly parents lived with them and his wife was on multiple medications related to stress.

His KnovaSolutions nurse discussed non-surgical options for pain management and the pharmacist reviewed non-narcotic medications for pain. The KnovaSolutions team also assisted the couple to locate resources within the community to help with the care of her parents.

With the information and support provided by KnovaSolutions, the member decided to postpone surgery while he tried other therapies. He also switched to non-narcotic pain medications which allowed him to return to work and so far, he has not missed any additional days. With the community resources to assist with care for her parents, his wife has decreased the number of medications she takes and reports feeling more in control of their home situation.

Both the member and his wife reported “how nice it is to have someone interested in more than just running tests or giving you pills.”

To reduce ever-increasing healthcare costs, self-insured American employers are now offering benefit plans and giving workers subsidies for buying health insurance from a menu of plans in private healthcare exchanges. A new health risk score analysis shows how consumers’ choices exposed some health insurance providers to substantial losses.

Allure of Multiple Choices

The government Affordable Care Act healthcare exchanges are the model that consultants are using to construct private healthcare exchanges for private employers. These roughly match the levels of coverage in health exchanges created under the Affordable Care Act. They range from high-deductible, low-premium bronze and silver plans to low-deductible, high-premium gold and platinum plans.

A Behavioral Economics Population Analysis

Using our comprehensive Research Reference Database, we analyzed what happened when a benefit program is replaced with a private health exchange. We used our Human Capital Risk Index® (HUI, patent pending) to compare plan populations.

Consumer Choice & the Pricing Problem

What did we find? People are smart and make rational decisions in choosing the health plan option that best fits their needs. Those who chose the lowest-premium, highest-deductible bronze plans had HUI scores of 0.6, well below the average of 1.0. Silver plans attracted HUI scores of 1.0; gold, 1.49; and platinum, 1.75. This shows that consumers made rational decisions based on assessments of their own risk.

Using traditional actuarial risk analyses, insurance companies significantly overpriced the bronze and silver plans. Bronze premiums of about $4,000 were twice as high as the participants’ actual health costs in 2013. Gold and platinum plans were under-priced — by about 40 percent for the platinum level.

Recipe for Failure

For insurance companies with greater exposure to gold and platinum policies — with above-average HUI scores — the potential for losses was as high as 20 percent. Those companies that attracted below-average HUI ratings stood to be well in the black with margins of 50 percent.

There are two takeaways: HUI scores could have great utility in plan pricing, and offering a single, aligned-incentives health plan would prevent the problem.

Multiple Medications: A Top Problem in the 5% Population

The use of multiple prescription medications, or polypharmacy, is a common problem within the 5% high-risk, high-cost population that the KnovaSolutions clinical prevention service engages. The average person in this group is taking more than 10 unique prescription medications. Polypharmacy causes poor job productivity, high absence rates, and low work quality.

The KnovaSolutions team, which includes a licensed pharmacist and master’s-prepared nurse, addresses the issue of polypharmacy by assessing the medications for interactions, duplication, compliance, effectiveness, and appropriate dosages. This assessment leads to many positive outcomes for the member including improved adherence in medications, a decreased number of medications without adverse side effects, less time away from work with medication adjustments, as well as improved health and productivity.

Research Findings

A Game-Changing Predictive Health Risk Index

We’re all defined by numbers such as age, weight, and credit scores. Each of these tells something about you now or in the past, but none of them can predict your future. Learn how our Human Capital Risk Index® predicts your future health here.

KnovaSolutions in Action: Alternatives to Drugs and Surgery

A female KnovaSolutions member who was recovering from surgery for colon cancer told her KnovaSolutions clinical prevention team about chronic pain in her left knee. Cortisone treatments and prescription pain medications over the years hadn’t provided significant relief.

The member asked about other options. Her KnovaSolutions nurse discussed with her the risks and benefits of knee surgery and non-surgical alternatives.

With support from her clinical prevention team, the member decided to try a physical therapy program aimed at strengthening the muscles that support the knee. With completion of the program and continued exercise, she reports the knee is now nearly pain-free. She says she is happy she avoided another surgery and no longer needs narcotic pain medications.

Healthcare Reform Seminar in Nebraska

Nebraska employers and healthcare organizations participated in our first healthcare reform seminar Nov. 14 in Omaha. The 26 individuals representing 20 companies learned how they can seize the initiative to carry out their own market-based reform programs even as the Affordable Care Act substantially increases costs with mandates for expanded benefits.

The program covered population risk analysis, the problems associated with health insurance exchanges, and the superiority of econometric over actuarial modeling. Breakout sessions provided deeper dives into the elements of our 5|50 Solution.

We plan to host a series of healthcare reform seminars in 2015 around the country and will be in touch when we come to a city near you.

We’re all defined by numbers. Social Security number, age, height, weight, bank account, credit score. Each of them tells something about you now or in the past, but none of them can predict your future.

There’s a new kind of number that is designed to predict something – your future health. It’s HCMS Group’s Human Capital Risk Index® (HUI, patent pending). The HUI (pronounced “Huey”) score takes into account more than 300 variables, including how many and what kinds of prescription drugs you take, what medical diagnoses you have, your healthcare history, how much time you’ve lost from work, and other important factors like your job compensation.

There are many other health risk calculations available — for assessing your chances of having kidney failure, heart disease, cancer and other diseases. Health insurance companies and health benefits consultants are creating broader metrics, attempting to get ahead of medical costs. Most of these are based on healthcare claims data and specific disease factors.

However, the predictive powers of most disease risk calculators are limited, according to company benefit managers who’ve tried them. “It seemed like we were always looking in the rear-view mirror,” says one.

What sets the HUI risk index apart is that its design gives the number considerable predictive power, based on more than a decade of research using the HCMS Group’s research reference database of almost 4 million people covered by more than 1,600 employers. As a person’s HUI score rises above an average of 1.0 for the general population and approaches 2.0 or higher, the chances of a complex health situation and high medical costs increase dramatically, research shows.

HCMS researchers compared the HUI score with a common disease risk metric and measured each index’s findings against actual healthcare costs for the 12 months through July 2012. The HUI’s predictive power for health benefit costs for the entire population was almost twice that of the disease index. It was also superior in forecasting disability compensation costs for the 5% of patients who account for more than 50% of medical spending. And it was almost twice as accurate in assessing a person’s likelihood of being in the 5% high-cost group. (See graphic below.)

The difference lies in the HUI’s unique formulas. It gives full weight immediately to medical diagnoses rather than waiting for medical claims to materialize. Expenses for some diseases such as cancer accumulate over time and may show up months or years later. The HUI score also relies on a big-data reference database that includes much more than just healthcare claims, providing a more complete picture for the whole person.

The HUI score is as dynamic as a credit score. Just as people are able to repair their finances and improve their ability to borrow, new research is showing that patients who own their health by helping themselves through adopting healthier behaviors become better consumers of medical care and improve their HUI scores – and their health.

*Based on an R2 statistical measure of significance used to assess predictive power measuring the relationship between risk score and total health benefit costs.
** Based on a pseudo R2 as measured from the logistic relationship between risk score and the likelihood of being high cost.

The HUI (pronounced “Huey”) score is based on more than 300 weighted risk variables for each person. They include prescription drug use, medical diagnoses, and disability and workers’ comp time — in addition to the cost of health benefits. A diagnosis of lung cancer, for example, immediately gets full weighting in a person’s HUI score, although big expenses come months later.

Health Management

The index is the cornerstone of our 5|50 SolutionTM because it identifies people in the 5% of the population who account for 50% of healthcare costs and those who soon will be in that group. Constant risk monitoring flags individuals with rising HUIs so that they can be provided prevention and primary care services sooner via our KnovaSolutions® clinical prevention service.

Clinical Decision-Making

More and more healthcare organizations such as hospital groups, HMOs, and on-site workplace clinics are using individual HUI scores at the point of service to support clinical decisions and monitor health outcomes. If a patient has a HUI of around 1.0, a doctor instantly knows it’s someone with average risk. A score of 2.0 or higher alerts the provider that the patient may have multiple diagnoses and a complex set of prescription drugs.

Risk-Pool Assessment

Our research found that the premiums for many health insurance plans offered on public exchanges this year were substantially lower than 2013 medical costs for the enrollees. In one case, expenses per person were 20% higher than premiums. A review showed that HUI scores for the covered population were significantly higher than average. The insurance carrier thus could factor HUI scores into pricing and reduce the risk of losses.

Data as a Service (DaaS)

Human Capital Risk Index® (HUI) scores are delivered to providers at the point of care via Data as a Service (DaaS). HCMS provides a real-time data service to deliver HUI via a stand-alone web interface, as well as via an Application Programming Interface (API) that allows HUI to be embedded in EMR/EHR software as well as other web applications. Common interoperability standards such as XML are supported. Contact your HCMS account team for more information.

Research Findings

Foster-Teen Pregnancies Are 5 Times the Rate for Other Girls

Teen pregnancy rates among foster children may be higher than previously thought. More than one in five teenage girls in foster care had a pregnancy in our study of Wyoming children ages 14-18.

We are pleased to announce that our website will be updated by the end of this week. The update will include a new design, introduction video, and success stories. Please be sure to visit in the next few days to see the latest content.

Dr. Hank Gardner Named Distinguished Alumnus by University of Wyoming

Dr. Hank Gardner was recently honored as a distinguished alumnus by the University of Wyoming. He is one of three alumni who was recognized at the Homecoming festivities in Laramie, Wyoming the weekend of October 18th.

Gardner attended UW on academic and athletic scholarships and went on to the University of Rochester School of Medicine & Dentistry in upstate New York.

Beyond his work at HCMS, Gardner has been an Army doctor in Vietnam, a pioneer in the managed care movement in Western New York, a leader in community health initiatives in Detroit, and a healthcare entrepreneur in New York City.

KnovaSolutions in Action:Improved Health Ownership & Averted Surgery

A KnovaSolutions member who presented with mold, pollen, and grass allergies complicated by chronic sinusitis was with months of fatigue, poor quality of life, and failing job performance. Frequent visits with an ear, nose, and throat specialist and an allergist resulted in several medications with no real improvement and that added to his fatigue. Sinus surgery was recommended but without any real assurance that it would fix the problem.

The KnovaSolutions information and support service helped him take control of his health by identifying and documenting his sinus and allergy symptom patters and triggers. Non-drowsy allergy medication options were discussed as well as home remedies and lifestyle adjustments in the home such as using a humidifier and using the air conditioning over having the windows open.

These health management actions resulted in improved sinus symptoms by avoiding triggers and using several home remedies. He has stopped using his prescription allergy medication and sees his primary care doctor regularly to follow up. He avoided sinus surgery and reports having more energy and is able to engage in his normal work and leisure activities.

Teen pregnancy rates among foster children may be higher than previously thought.

More than one in five teenage girls in foster care had a pregnancy in a study of Wyoming children ages 14-18, according to HCMS Group. The girls’ pregnancy rate was almost five times the rate for teenagers covered by the Wyoming health plan for state employees, and 11 times the rate for girls covered by private medical insurance in the state.

National data on pregnancies don’t break out foster teens. One often-cited study found that girls in foster care in Iowa, Illinois and Wisconsin were 2.5 times as likely to become pregnant as those not in foster care. Among all girls ages 15-19, the pregnancy rate in 2010 was 5.7%, the authoritative Guttmacher Institute in New York reported this year. In Wyoming, the rate was 5% among girls covered by the state health plan, 2% for those under private insurance and 22% for foster teens.

The analysis of teen pregnancy rates in Wyoming may be the first based on statewide data. The study covered more than 7,500 girls between January 1, 2003, and December 31, 2013. HCMS Group maintains a research reference database that includes Wyoming records from private medical plans, the state-employee program and Medicaid, which covers children in foster care. Wyoming is the least populous state with 583,000 people.

Among child welfare professionals, there’s little mystery to why pregnancy rates are much higher for foster children. Those who have studied the matter cite the combination of unstable living situations, adolescence, and exposure to sexual abuse. There is also a lack of training for foster parents in teaching girls about self-protection and self-esteem. Some of the pregnancies are accidental, and in other cases girls set out to fill a void in their lives by creating a family of their own, studies have shown.

As the Wyoming girls reached the ages of 16-18, the rates jumped to between 25% and 29%, according to HCMS. For girls 16-18 who were covered by the state health plan, the rates were 6% to 7%, while those with private benefit programs had rates of 3% to 4%.

“Many people forget this is not the immaculate conception,” said Eileen Mayers Pasztor, professor, School of Social Work, California State University, Long Beach, who has long studied and worked in the child welfare field. “There always is a father, and where is the training for young men regarding self-esteem and responsibility and fatherhood? There also is the issue of social justice when teenage girls become pregnant and their babies’ fathers are over 18 years of age; isn’t sex with a minor rape?”

To address the 5|50 problem (the 5% of any population that accounts for more than 50% of health benefit costs), it’s necessary to identify who is in the high-risk group, or soon will be. Our Human Capital Risk Index® (HUI, patent pending) is uniquely designed to do just that, and data compiled by HCMS proves the predictive power of the index as the foundation for our 5|50 Solution™.

Conceptual Basis

The HUI (pronounced “Huey”) grew out of a different understanding of healthcare from other risk metrics. Others focus on the cost of diseases and actuarial studies of demographics such as age and gender. They don’t consider the whole person and economic incentives.

Econometric. The HUI reflects the role of behavioral economic incentives in healthcare—for patients and providers. In addition to disease, the HUI incorporates data on health-benefit design, compensation systems, and time-off policies.

Person-centered. Our philosophy is that risk assessment must take into account the whole person, not just specific diseases, including compensation and work history.

What It Is

Based on more than a decade of research on 4 million people, the HUI risk index incorporates more than 300 weighted risk variables for each individual. These include medical diagnoses, prescription drugs, compensation, and use of disability and workers’ comp.

A person with average risk has a score of 1.0. For example, someone with diagnoses of lung cancer and asthma, taking antibiotics and breathing drugs, and with a history of workers’ comp and disability time off has a HUI of 8.35.

How It Works

Its design makes the HUI not just a measure of risk but more importantly a predictor of risk. Metrics based on medical claims are lagging indicators because of delays in the payment system. In our 5|50 Solution, monthly risk monitoring identifies individuals whose HUI scores begin climbing. These people can then be provided prevention and primary care service earlier.

How do you evaluate provider performance? Click here to read the full post.

Member Center Update Includes HUI Scores

We are happy to share that members in KnovaSolutions, the clinical prevention service of the 5|50 Solution, now have access to their individual Human Capital Risk Index (iHUI) score via the KnovaSolutions Member Center. The Member Center is a confidential portal that provides a safe, secure way for members to communicate with their KnovaSolutions Clinical Team.

With the addition of the iHUI, the Member Center provides members with better information to understand the impact of their healthcare decisions. The iHUI stresses the importance of owning one’s own health and being as an active and informed healthcare consumer. By measuring personal progress in health management using the HUI, individuals can monitor their health status.

As iHUI is added to the Member Center, our employer clients will receive an invitation for an iHUI member center orientation and to discuss the rollout of the iHUI to employees. If you have not already been contacted to schedule an orientation, you will be soon.

KnovaSolutions in Action: Improved Health & Caregiving

A KnovaSolutions member enrolled in the clinical prevention service with high blood pressure, elevated cholesterol, chronic back pain, and lost work time. His wife suffers from a brain injury and could no longer care for herself. Results were sleepless nights, frequent sick days, and costly medical bills.

His KnovaSolutions nurse informed him of resources that were available to assist him with night-time caregivers and medical equipment. They also discussed lifestyle changes and stress-relieving strategies to help him manage his own health.

Today, the member has hired night-time caregivers through a community program that fit within their budget. He is now sleeping better at night and has been able to miss less work. His back pain has improved due to the lifting equipment provided by the community program. With reduced pain, less stress, and a commitment to a healthier diet, his blood pressure and cholesterol have stabilized. In general, he has a healthier life.

We’re Now on Twitter

We now have a company account on Twitter. Follow @HCMSGroup to read the latest research findings, company news, and relevant health and human capital news from the community.

Hank Presents at MedX

Dr. Hank Gardner unveiled HUI for the first time before an academic healthcare conference at Stanford University’s MedX Conference on September 6.

Gardner outlined the unique features of the HUI metric (patent pending) before more than 100 people attending the conference. Read more here.

Using private health insurance exchanges to hold down corporate health benefits spending results in higher use of workers’ compensation, researchers at HCMS Group found.

An analysis of private-employer data in the HCMS Research Reference Database showed that workers who selected health insurance plans with lower monthly premiums and higher deductibles filed more claims for workers’ compensation than the year before. Most of the people in the study opted for the less-expensive plans, designated bronze and silver under the Affordable Care Act.

Many American self-insured employers opted into private insurance exchanges in an effort to reduce their exposure to volatile and surging healthcare costs fueled by the healthcare law. Private exchanges are similar to the public exchanges established under the legislation. Notable employers using these exchanges to replace risk-bearing self-insurance plans include Sears Holdings, Darden Restaurants, Petco Animal Supplies, and IBM. These companies gave workers subsidies for buying health insurance from a menu of four or five plans, typically engaging a consulting firm to set up the exchange.

The HCMS findings show how medical-cost risk can migrate from one expense category to others, as documented years ago by HCMS. To prevent that from happening, employers need integrated health benefits data to carry out a comprehensive health benefits overhaul. This should take into account not only medical benefits but also incentives related to workers’ compensation and short-term disability. HCMS research shows that employers can lower total benefit costs by 10% to 15% by offering a single aligned-incentives health plan with a health account, incentives to use primary care and prevention services for complex medical situations, and a deductible design that favors value-based use of hospitals and specialists offering the best care at the lowest cost.

HCMS researchers compared expenses from the first five months of 2014 with those from the first five months of 2013. People with high-deductible health plans filed 8.1% more claims for workers’ compensation in the 2014 period than a year earlier. This suggests that people migrated to the workers’ compensation system in response to cost-sharing incentives. That happens mostly with musculoskeletal conditions (such as back injury or pain and carpal tunnel) where patients and providers have leeway to say whether it is work-related or not. If chalking a condition up to work avoids out-of-pocket expense to cover a deductible, then workers have an incentive to do so.

Bottom line for employers: The study shows that reducing the risk of healthcare costs is more complex than simply steering workers to medical insurance exchanges. These systems will push some of that risk back to employers in the form of increased use of workers’ compensation and lost time benefits. This should be a major factor for employers in deciding on healthcare exchanges.

— By Robert L. Simison, HCMS Communications
On behalf of HCMS Data Analytics

New HCMS research provides an answer to one of the most vexing questions involving healthcare cost and quality: How do you evaluate provider performance?

Benefit providers and employers have increasingly embraced the idea of steering patients to “centers of excellence,” or providers that deliver the highest quality of care at the best prices. However, providers often resist evaluation on cost and quality performance because the risk of their patients can’t be accurately measured and therefore the performance outcomes are flawed.

HCMS Group’s individual health predictive risk metric provides an answer to that objection. The HCMS Human Capital Risk Index® (HUI, patent pending), can measure how well any medical provider–hospital, specialist, primary care provider–manages the cost and quality risk of patients. The HUI risk index is based on more than 300 personal characteristics including medical diagnoses, prescriptions, and health benefits use.

HCMS researchers evaluated a regional group of nine hospitals. The hospitals had average patient HUI scores several times higher than the overall average score of 1.0 for the general population (see table below). The average cost of a broad mix of hospitalizations ranged from $13,080 to $75,726 per person. The data was from the HCMS Research Reference Database, which includes almost 4 million people covered by more than 200 employers.

Researchers adjusted the cost totals to account for the different risk profile of each patient. The calculation produced a Value HUI (V|HUI) that links cost to the patients’ risk profiles. On this basis, the two top-rated hospitals had risk-adjusted costs of $4,410 and $4,791, putting them in the range of the most effective institutions that HCMS has studied. The lowest-ranked institution had a risk-adjusted cost of $12,116, almost three times as high as the No. 1 provider.

The V|HUI calculation provides an indirect measure of quality. Lower cost relative to individual patient situation suggests less bouncing from specialist to specialist and fewer unnecessary procedures and medications, all of which increase expenses and subject patients to more risk. There is no direct method of rating healthcare quality. The most-often used evidence-based medicine guidelines don’t measure the right things, are subject to small sample sizes, and don’t account for individual conditions.

HCMS researchers also compared the findings with the results of a self-reporting tool widely used for ranking hospitals. There was no correlation. The top hospital based on the self-reporting index ranked 6th in the V|HUI ratings. The two best institutions based on V|HUI scored in the middle and at the bottom of the self-evaluation scale.

HCMS Study of 9 Regional Hospitals

Employers and benefit providers can provide economic incentives in the form of deductibles and cost-sharing to encourage patients to use top-rated hospitals and providers. Further research will refine the analysis to identify centers of excellence in specific procedures of the sort that business groups and insurance companies have singled out, such as hip and knee replacement; bariatric, spine, and transplant surgeries; and cancer treatment.

To learn more about how to evaluate centers of excellence in healthcare reform, listen to our webinar recording here.

Five percent of any population accounts for more than 50% of employer benefit costs (the 5|50 problem). Individuals in this 5% group typically do not have a primary healthcare provider, so their treatment tends to be fragmented. These people often receive disability compensation, and they average 10 providers, 11 diagnoses, 32 tests, and 10 medications annually.

What We Know

We recently announced our 5|50 Solution™ as the unified package of our advanced data analytics and clinical prevention services. This combination offers employers and individuals a rational, data- and economics-based way of addressing the 5|50 problem.

Using our data analytic capabilities, we also know that half of the money being spent on the 5% group is probably putting individuals at higher risk—rather than contributing to health improvement.
This also drains valuable resources and is part of the reason why the U.S. spends 30% more on healthcare than comparable countries, without similar gains.

Economics and Health

People have inherent capacities to contribute to family, work, and the community (their human capital). Since people will do what is in their best interest, it’s important to understand the economic incentives that are embedded in health benefit policies and how they influence individuals.

Our Human Capital Risk Index (HUI®, patent pending) takes those policies into account along with roughly 300 other variables to identify people at risk of entering the 5% group. We can then provide them with clinical prevention services through KnovaSolutions® to help them return to health while reducing costs.

5|50 Solution Values

People matter for their human capital abilities and motivations, both in and out of the workplace.

Prevention is the best medicine.

Economic incentives are important to understand.

Healthier people and less wasteful spending are in everyone’s best interest.

Research Findings

Education and Health
Health risks for people with a college degree are 20% to 30% lower than for those with a high school education. The finding is based on our Human Capital Risk Index® (HUI, patent pending) and verifies previous research results. Click here to visit the full post.

Health and Performance
There’s a strong link between better health and better job performance, according to research based on HUI scores and year-end evaluations. It may be that high performance relates to self-responsibility for health, or that illness hurts productivity. Click here to visit the full post.

Data Center Enhancements

We are excited to announce significant upgrades to our primary data center, enhancing security and adding capacity for growth. In the process, we are relocating the data center to a new, state-of-the-art facility in Cheyenne, Wyoming. This will result in greater physical and network security, provide for expansion, and dramatically improve redundancy and fault tolerance in critical infrastructure resources—power, internet connectivity, and cooling.

The new data center is operated by Green House Data—one of the most energy-efficient data centers in the world, 100% powered by renewable energy. With a dry climate, easy access to all major cross-country fiber-optic cable lines, Cheyenne is an optimal location for a green data center. We are pleased to be one of the first tenants in this new Wyoming resource.

KnovaSolutions in Action: Better Health, Less Stress

A middle-aged female reported feeling overwhelmed by heart, lung, and more than a dozen other conditions when she joined KnovaSolutions in 2012. Her annual benefits were costing $29,200 at the time. She was seeing 13 specialists and taking 15 prescription medications. With a HUI score of 3.5, her health risk was 3.5 times that of the average person. She had 17 diagnoses that included cardiovascular, respiratory, depression, and musculoskeletal conditions.

Over the course of a year, her dedicated KnovaSolutions team consisting of a nurse, a pharmacist, and a medical research librarian spent 18 hours consulting with her by phone. She is now using a primary care provider to coordinate her care. She has reduced the number of prescription medications she is taking to 8 and decreased her overall risk by 37%. She reports feeling healthier and much less overwhelmed. Her annual benefit costs have fallen by 80% and now total $5,649.

HCMS Update

HCMS opened an additional office in August in Loveland, Colorado. The new location houses many of our Colorado staff members, including data analysts and account managers. The new facility reflects the firm’s growth and provides space for continued expansion of the staff to meet the needs of new clients.

We are pleased to welcome Robert L. Simison to our team as a communications consultant. Bob’s very successful career has included work as an investigative reporter at The Wall Street Journal and Bloomberg News. He has a degree in journalism from the University of Kansas.